La Presse 21 Feb 2004

For every hit, there are lots of failures

Quebec cinema has its own economics; who risks what?

Of the $10 cost of a cinema ticket, $5 goes to the owner of the theatre. That’s what keeps the giant American Famous Players or the little Beaubien cinema in Rosemont in business. The other half of the ticket price goes back to the investors, both public and private.

At this time when Quebec cinema is making millions of dollars, what happens to the money?

”Those who take the risks in the film industry make money from the film industry,” replies Charles Binamé, director of the biggest commercial success in the entire history of Quebec cinema, Séraphin - Un homme et son péché. This feature has made more than eight million dollars at the box office. This is followed by  La Grande Séduction by Jean-François Pouliot, nominated for a Jutra as best film of the year, which has taken $6,751,575. In addition, the three films in the Les Boys series have earned almost 17 million.

”It’s the same principle as roulette,” Binamé continues. “The more you stake, the more you can win. But it’s also possible to lose the lot.”

If the film doesn’t do well, it’s the distributor who takes the rap. “When a film bombs, it’s always the distributor who pays,” confirms Guy Gagnon,  president of Alliance Atlantis Vivafilm, who have just released Vendus (which survived only two weeks on release) and Dans l'oeil du chat.

The distributor of a film invests from the beginning of the project, advancing at least 10 % of the cost of production. In addition, all the publicity falls to the distributor, and the bigger the campaign, the more the costs mount up. If it’s a flop, he loses his stake; if it’s a success, he pockets the entire amount.

As in the case of  Séraphin. Patrick Roy and Guy Gagnon of Alliance maintain that they gambled their jobs on this venture. The publicity and marketing costs soared, but Alliance – who distribute the four films nominated for a Jutra for best film – decided to pull out all the stops and gamble on its profitability. A successful gamble, evidenced  by Séraphin’s 8 million dollar takings. So four million  dollars went to Alliance. As is the norm for the industry, the distributor took a 35% commission, as well as recovering the marketing expenses, around 2 million.

They will also recover the expenses invested in the production, what is called in the cinema “the minimum guarantee”, and which hovers around 10 %, depending on the agreement drawn up with the producer. As Séraphin cost 6.6 million, you can calculate that Alliance contributed around $500,000 towards production costs.

The remaining money, if there is any, is returned to the producer who will have to pay half to the investors, Téléfilm Canada and la Société de développement des entreprises culturelles du Québec (SODEC), who advance around 65 % of the production money. Add to this public contribution an additional 20 % in tax credits to the producers. In total, public funds represent 85 % of the production costs of a film.

The rest of the budget is completed by the “minimum guarantee” - 10 % - mentioned above, and by 5% invested by the producer, who can reduce his stake by selling the distribution rights for his film to television broadcasters.

In the entire history of Quebec cinema, the only film to have paid Téléfilm and SODEC back all the money borrowed is  Le Déclin de l'Empire américain, thanks to its international success which earned substantial additional revenue. Will Denys Arcand repeat this feat with Les Invasions barbares? The film took a little under five million at the Quebec box-office, but it will attract significant revenue from overseas sales. Denise Robert, the producer of Invasions, says that she will wait until it’s run its course in the theatres before doing her sums.

The DVD industry

So much for successful gambles. But there are also losing gambles. Les Dangereux, for example, a monumental flop which, after a short run in the cinemas, put Christal Films into a deficit of around a million dollars.

Distributors and producers can, however, recover a box-office failure by sales to television and to DVD and video stores. In the case of Les Dangereux, the film did well on DVD, both here and abroad: Louis Saïa’s feature film could be found in video clubs in 17 countries. These international sales brought in around $250,000 for the distributor, Christal Films. This being the case, at the end of the day the Quebecois distributor reduced its losses due to the failure of the film in the theatres. Les Dangereux finally cost Christal around $300,000.

Some films are naturally destined to do better on video. “Films for young people, for example” says Sylvain Gagné, vice-president of Christal. Others benefit from good word of mouth. A film like La loi du cochon took $150,000 at the cinema and $100,000 in the video clubs.

Revenues from the video stores and clubs go mainly to the distributor who pays for the marketing and the manufacture of the tapes. The distributor can choose to sell these tapes to the video club owner at a good price, or to considerably reduce the sale price in return for part of the profit from each store. The producer will also receive a share, around 10 % of the profits. But, like the box-office revenues, he has to return half to the investors.

”You have to understand that this idea that you can make money out of film is very new for Quebec,” says Charles Binamé. Séraphin was profitable, but all the same we had to make 4 million in ticket sales in order to cover our costs.”

And the artistes?

Irrespective of the film’s revenue, the artisans - directors, actors, scriptwriters, technicians – receive a fixed salary. In Quebec, actors don’t ask for a percentage of the takings as is sometimes the case in the United States. On the other hand, those who are the stars of the big screen can make up to $8,000 per day filming.

The director also has a fixed fee, priced according to the rates of the Directors’Guild, but he can negotiate a bonus. However, he has no access to the famous performance bonuses awarded by Téléfilm Canada which go directly back to his producer. If he fancies working with someone else for his next film, too bad. His success will benefit another filmmaker.

“A lot is spoken about money and success for Quebecois cinema,” says producer Claude Veillet, of Films Vision 4 (La Mystérieuse Mademoiselle C, Le Dernier souffle). “Who makes money in Quebec cinema? I think one should ask who profits from Quebec cinema. The answer is lots of people : the artistes, the technicians, the producers, the distribution companies. And the State, who gets taxes from all these people. But I think that in the end, it’s the public who benefit most”.